The Orocobre Limited (ASX: ORE) share price has edged lower in morning trade following an acquisition announcement.
At the time of writing the lithium miner's shares are down 0.5% to $3.27.
What did Orocobre announce?
This morning Orocobre announced that it has entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Advantage Lithium Corp that it does not already own.
Advantage Lithium is the joint venture partner of Orocobre's Cauchari operation in Argentina. This operation has 4.8 million tonnes (Mt) of Measured and Indicated Resources and 1.5 Mt of Inferred Resources. Orocobre will also acquire Advantage Lithium's exploration properties, including those at Antofalla and Incahuasi.
According to the release, management believes this transaction will allow Orocobre to continue to develop the Olaroz/Cauchari basin in a cost-effective manner. It expects it to optimise extraction of the resource to the benefit of shareholders, local communities, the governments of Argentina, and other stakeholders.
Management also feels that it further consolidates its leading position within the region as a low-cost producer of lithium chemicals.
What is Orocobre paying for Advantage Lithium?
Orocobre has agreed an all-scrip deal of 0.142 Orocobre shares per Advantage Lithium share.
Based on the last closing price of Orocobre shares of A$3.291, this equates to a value of approximately C$0.42 per Advantage Lithium share.
The arrangement is subject to approval by the Supreme Court of British Columbia and requires approval of at least 66.66% of shareholder votes. Orocobre is currently the largest Advantage Lithium shareholder with a 34.7% stake.
Orocobre Managing Director and CEO Mr. Martín Pérez de Solay commented, "The Advantage team led by David Sidoo, Callum Grant and Miguel Peral have been hugely successful in progressing the Cauchari project from exploration to pre-development and this transaction is an exciting opportunity for both Orocobre and Advantage shareholders to consolidate on the achievements to date."
"For Advantage shareholders, they can now be part of something bigger without the challenges junior companies face when moving from exploration to development and onto production. For Orocobre shareholders, we will consolidate our position in the Olaroz/Cauchari basin which will give us significant flexibility as we deliver additional growth to our existing business," he added.
